FASB and SEC 2026 Roundup: Six Accounting Changes CFOs Need to Track Before Year-End

Last updated: August 27, 2026

Finance and accounting teams closing out 2026 are tracking one of the busiest stretches of FASB and SEC rulemaking in years. Between new expense-disaggregation footnotes, the first-ever US GAAP standard for government grants, expanded share-based compensation rules, tougher income tax disclosures, and two pending SEC proposals that would reshape quarterly reporting itself, CFOs have at least six separate rule changes to sequence before year-end — each with its own effective date and its own systems implications.

What New Expense Disclosure Does ASU 2024-03 Require?

ASU 2024-03 requires public companies to add a footnote breaking out key expense captions into five natural expense categories: inventory purchases, employee compensation, depreciation of fixed assets, intangible asset amortization, and depletion or amortization related to oil and gas activities.

The standard applies only to public companies and takes effect for fiscal years beginning after December 15, 2026 — meaning it will first appear in the 2027 Form 10-K for calendar-year filers. Beyond the five natural categories, companies must also disclose reimbursements, expenses already required elsewhere under GAAP, and a qualitative description of any “other” expense amounts that do not fit cleanly into the defined categories, along with a defined measure of annual selling expense. Because the standard is footnote-only rather than a change to the face of the income statement, it is easy to underestimate the systems work involved — most finance teams will need to rebuild how their general ledger tags and rolls up expense data to produce the required breakdown without manual reclassification each quarter.

What Does the New Government Grants Standard (ASU 2025-10) Cover?

ASU 2025-10, issued by FASB on December 4, 2025, establishes the first comprehensive US GAAP guidance for how business entities should account for government grants — an area that previously had no dedicated US GAAP standard and relied on analogies to other frameworks.

The standard applies to all for-profit entities but excludes not-for-profit organizations. Under its recognition model, an entity can only recognize the benefit of a government grant once it is probable both that the entity will comply with the grant’s conditions and that the grant will actually be received — and recognition cannot occur before the entity has incurred the related costs the grant is meant to offset. Grants tied to the acquisition of an asset are deferred on the balance sheet and recognized over the asset’s useful life, while grants tied to covering specific expenses are recognized alongside those expenses as they are incurred. Required disclosures include the nature of the grant, the accounting policy applied, the amounts recognized in the financial statements, any unmet conditions that create risk of clawback, and the terms of any clawback provisions themselves.

The effective dates sit further out than the other changes on this list: annual periods beginning after December 15, 2028 for public business entities, and after December 15, 2029 for all other entities. That distance is deceptive — companies that receive government grants (increasingly common given subsidy programs tied to reshoring, clean energy, and semiconductor manufacturing) should start building a grant inventory and accounting policy now, since the standard requires policy elections that are much easier to make prospectively than to unwind retroactively close to the effective date.

How Is Share-Based Compensation Accounting Changing?

Two separate ASUs are expanding and clarifying share-based compensation rules: ASU 2025-04 broadens what counts as a performance condition, and ASU 2024-01 clarifies how profits interests and phantom equity units should be classified.

ASU 2025-04 takes effect for fiscal years beginning after December 15, 2026. It expands the scope of performance conditions eligible for specific accounting treatment to explicitly include targets such as purchase volumes, dollar-value thresholds, and customer-related purchase metrics — categories that previously sat in a gray area for many companies granting equity awards tied to commercial performance rather than pure financial metrics. The standard also eliminates the “forfeit-as-you-go” election some companies used, instead requiring an upfront estimate of expected forfeitures. ASU 2024-01, which took effect for public companies in fiscal year 2025 and takes effect for private companies in fiscal year 2026, resolves a longstanding classification question for profits interests and phantom units by using enterprise value as the dividing line: awards that share in residual equity value fall under stock-compensation accounting (ASC 718), while awards tied only to an operating metric, with no claim on residual equity value, do not.

What Do the New Income Tax Disclosure Rules Require?

ASU 2023-09 requires a more detailed reconciliation between a company’s statutory federal tax rate and its actual effective tax rate, along with a breakdown of income taxes paid across federal, state, and foreign jurisdictions, expanded tax credit transparency, and disclosure of movements in valuation allowances.

Public companies adopted this standard in 2025, and private companies are working through adoption in 2026. For multinational filers in particular, the jurisdictional breakdown requirement is the heaviest lift, since it typically requires tax and financial-reporting systems that were never designed to talk to each other at that level of granularity to be reconciled for external disclosure rather than internal planning alone.

What Reporting Changes Is the SEC Proposing?

The SEC has floated two significant proposals in 2026: optional semiannual reporting to replace quarterly filings for companies that elect it, and a redesign of the filer-status framework that determines which disclosure and audit requirements apply to a given company.

The semiannual reporting proposal, put forward May 5, 2026, would let companies elect to file a new Form 10-S twice a year instead of quarterly Form 10-Qs, with the SEC framing the change as a way to reduce compliance complexity and make public-company status more attractive relative to staying private. Quarterly reporting would remain the default for companies that do not affirmatively elect the new option, and 8-K disclosure obligations for material events would continue regardless of election. Investor feedback on the proposal has been largely negative, with concerns centered on reduced analyst coverage and a widening information gap between reporting periods.

The second proposal, from May 19, 2026, would raise the public-float threshold for “large accelerated filer” status from $700 million to $2 billion, measured over two consecutive years, while eliminating the separate “accelerated filer” and “smaller reporting company” categories entirely and folding their populations into an expanded non-accelerated filer group. Non-accelerated filers would gain scaled disclosure requirements, longer filing deadlines, and — notably — relief from the internal-controls-over-financial-reporting audit requirement that currently applies to larger companies. The proposal would also place newly public companies in non-accelerated status for a minimum of five years and create a new small non-accelerated filer category, for companies under $35 million in total assets, with an additional 30 days to file annual reports and five additional days for interim filings.

Is the SEC also changing what it focuses on in comment letters?

Comment letter volume has fallen roughly 400 letters short of the prior year’s total, but the recurring themes have not changed: MD&A quantification and detail, non-GAAP measure prominence and reconciliation accuracy, completeness of segment reporting, revenue recognition disaggregation and judgment disclosure, and the reasonableness of goodwill and intangible impairment assumptions remain the areas the SEC’s Division of Corporation Finance flags most often.

What Should Finance Teams Prioritize Before Year-End 2026?

Different entity types face different urgency levels across these six changes, and sequencing matters more than trying to tackle all of them simultaneously.

• Public companies: Treat ASU 2024-03 expense disaggregation as a systems and process project starting now, since the five-category breakdown is difficult to produce retroactively from a general ledger that was not built to tag expenses that way from day one.
• Private companies: Prioritize the 2026 income tax disclosure adoption under ASU 2023-09 and begin drafting a government-grant accounting policy under ASU 2025-10 even though its effective date is years away, since grant volume tied to reshoring and clean-energy incentives is only growing.
• All entities receiving government grants: Build a grant inventory now — cataloging each grant’s conditions, timing, and clawback terms — so the ASU 2025-10 policy election is based on complete information rather than a year-end scramble.
• PE-backed and pre-IPO companies: Reassess how existing profits interests and management incentive units are classified under ASU 2024-01’s enterprise-value test, and factor the SEC’s proposed five-year non-accelerated status for new public companies into IPO-readiness and post-IPO compliance planning.
• All public-company finance and legal teams: Track the two SEC proposals separately from the FASB changes above — both remain proposals, not final rules, and the semiannual reporting option in particular has drawn enough investor pushback that its final form could differ materially from what was proposed in May.

For related coverage, see our analysis of the SEC’s new Financial Reporting and Accounting Enforcement Unit and tariff refund accounting treatment in 2026, and browse the Accounting hub for related standards guidance.

Frequently Asked Questions

When does the new FASB expense disaggregation rule take effect?

ASU 2024-03 applies to public companies for fiscal years beginning after December 15, 2026, meaning it will first appear in the 2027 Form 10-K for calendar-year filers.

When must companies start applying the new government grants standard?

ASU 2025-10 is effective for annual periods beginning after December 15, 2028 for public business entities and after December 15, 2029 for all other entities, though FASB issued the standard on December 4, 2025.

Does the new government grants standard apply to nonprofits?

No. ASU 2025-10 applies to all for-profit business entities but explicitly excludes not-for-profit organizations.

What would the SEC’s proposed semiannual reporting option change?

The May 2026 proposal would let companies elect to file a new Form 10-S twice a year instead of quarterly 10-Qs, while keeping quarterly reporting as the default and preserving existing 8-K obligations for material events.

How much would the SEC’s filer-status proposal raise the large accelerated filer threshold?

The May 19, 2026 proposal would raise the large accelerated filer public-float threshold from $700 million to $2 billion, measured over two consecutive years, while eliminating the separate accelerated filer and smaller reporting company categories.